DANCEST 805 Lecture Notes - Lecture 18: Asset Allocation, Primary Market, Active Management
Document Summary
Essentials of investment chapter 1 terms and quick overview. Investment commitment of current resources in the expectation of deriving greater resources in the future. Real assets assets used to produce goods and services. Financial assets claims on real assets or the income generated by them. The successes or failure of the financial assets we choose to purchase ultimately depend on the performance of the underlying real assets. Fixed-income (debt) securities pay a specified cash flow over a specific period. Derivative securities securities providing payoffs that depend on the values of other assets. Agency problems conflicts of interest between managers and stockholders. Asset allocation allocation of an investment portfolio across broad asset classes. Security selection choice of specific securities within each asset class. Security analysis analysis of the value of securities. Risk-return trade-off assets with higher expected returns entail greater risk. Passive management buying and holding a diversified portfolio without attempting to identify mispriced securities.
